PRIVATE MORTGAGE INSURANCE TAX DEDUCTION EXTENDED!
LENDER-REQUIRED INSURANCE FOR THOSE WITH LESS THAN 20% DOWN PAYMENT STAYS DEDUCTIBLE THROUGH 2010!
Congress has extended a law, originally signed in 2006, to allow many home buyers who leveraged their home to over 80% of its value to continue to deduct PMI payments through 2010. For some, the still-deductible insurance totals $150/month.
For many years, the fact that Private Mortgage Insurance was not deductible created new high-leverage loan products, some with financing as high as 100% of the home's value, that avoided the need for PMI. These alternate loan products involved an immediate second mortgage, closing at the same time as the original first mortgage, but at a substantially higher interest rate, and often with a different lender.
Often times, when those with many high-leverage loans decide to sell, they find that area appreciation has not kept up with what they owe on their two mortgages, and they actually owe more than what they are likely to sell their homes for, minus selling expenses. Dean's Team had several such transactions here in Chicago and the suburbs in 2007, where the seller's actually had to bring funds to the closing table in order to finalize the transaction. The problem is far greater outside of the Chicago area, especially in Florida, California, and other major cities where prices have dropped considerably from their high prices of a couple of years ago.
The extension of the Private Mortgage Insurance Deduction applies to borrowers with loans originating between 2007 and 2010, and who have a gross adjusted family income of less than $100,000. Those earning between $100,000 and $109,000 can take a reduced deduction on their tax returns next year.
For more information, and a more optimistic prediction of the Chicago Real Estate Market in 2008, including some statistics from David Seiders, Chief Economist of The National Association of Home Builders, click on Mary Umberger's Column in today's Chicago Tribune.
HAPPY NEW YEAR, EVERYONE!
DEAN MOSS & DEAN'S TEAM
